How Will a Roth Conversion Affect My ACA Health Insurance?
The Affordable Care Act (ACA) provides subsidies to help people afford health insurance. The amount of subsidy you qualify for depends on your income. A Roth conversion is a way to move money from a traditional IRA to a Roth IRA. Roth IRAs are taxed when you contribute to them, but withdrawals in retirement are tax-free.
ACA Subsidies and Roth Conversions
Roth conversions can affect your ACA eligibility and subsidy amount. The IRS considers Roth conversion contributions as income for the year in which they are made. This means that a Roth conversion could increase your modified adjusted gross income (MAGI), which is used to determine your ACA eligibility and subsidy amount.
For example, let’s say you have a MAGI of $50,000 and you do a Roth conversion of $20,000. Your new MAGI would be $70,000. This could increase your ACA subsidy amount or even make you ineligible for a subsidy.
Replanning after Roth Conversion
If you are planning to do a Roth conversion, it is important to consider how it will affect your ACA eligibility and subsidy. You may need to adjust your ACA plan or income to ensure that you are still eligible for a subsidy.
Seeking Professional Help
If you’re considering a Roth conversion and are unsure how it will affect your ACA coverage, it is important to talk to a healthcare professional who can help you understand your options or a licensed health insurance agent.
In Conclusion
Roth conversions can be a good way to save for retirement, but it is important to be aware of how they can affect your ACA eligibility and subsidy amount.
Disclaimer
The information provided in this blog is for general informational purposes only and should not be considered as financial or tax advice. Please consult with a qualified financial professional before making any decisions regarding your Roth conversions or ACA coverage.
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